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5 Key Differences Between Hard and Soft Forks

The Controversial Fork

Blockchain forks seem to be a very controversial topic. Just look at the disagreement that arose between Ethereum users resulting in a declaration of independence on July 20th, 2016! But, are forks really that bad? What exactly does a fork do for the blockchain? Why do we need them? And what is the difference between hard and soft forks?

 

What is a Temporary Fork?

A temporary fork is one that occurs incidentally. An example of a temporary fork is that which occurs when there is a split in consensus. In other words, when miners discover a block at the same time, it results in two chains. However, this is only a temporary split as the chain that finds the next block first becomes the longest chain. By default, the longest chain automatically becomes “truth”.

 

What is a Hard Fork?

A hard fork is a change to an algorithm that mitigates the rules enforced by the upgraded full nodes. A block considered invalid before the hard fork may now be valid if it follows the new algorithm. By definition, a hard fork is not backward compatible.

Hard forks change the defining parameters of a blockchain. Examples of this include changing blocksize, cryptographic difficulty, or a change to the information a blockchain holds. Such a change causes acceptance of blocks by the new version and rejection by the old. The chain abandons the old branch and accepts the new branch.

Alternatively, a hard fork can lead to what is known as a “chain split”. What this means is two or more versions of the blockchain shared the same history up to the point that the rulesets deviate. One example of a hard fork occurred in August 2017. A group of Bitcoin developers initiated a hard fork to avoid the SegWit updates. As a result, the chain spilt and resulted in the formation of Bitcoin Cash (BCH).

A useful metaphor for a hard fork is that of a parallel universe.

 

What is a Soft Fork?

A soft fork is a backward compatible way of upgrading software. Further, by definition, a soft fork is as a temporary split in the blockchain occurring when one executes new rules. Full nodes must upgrade to the new rules to enforce change. The majority of nodes must upgrade; otherwise, the soft fork fails, and the original chain carries on unchanged. A block considered valid before the soft fork is considered invalid by upgraded full nodes if it violates the new soft fork algorithm.

“Soft forks represent a gradual upgrading mechanism”. Aziz, Master the Crypto.

Ultimately, soft forks implement “cosmetic” changes or add functions that don’t change the structure of the blockchain itself. For example, the P2SH soft fork enabled multi-signature addresses in Bitcoin’s network but didn’t change the core structure.

It can help to think of a soft fork like a change in the speed limit on a busy road. Imagine this road has a minimum speed limit of 30 km/hour, and a maximum of 60 km/hour. The transport authority then increases the minimum to 50 km/hour, and the maximum to 80 km/hour. A driver usually travelling 30 km/hour now needs to speed up to comply with the new rules, or risks being left behind and penalised. However, if the majority of drivers think this increase isn’t right and continue to travel at 30 km/hour, the transport authority may abandon the idea of increasing the limit and carry on as usual.

 

#5 Key Differences Between Hard and Soft Forks

Differences between hard and soft forks

Upcoming Forks

Ethereum Classic to Remove the Difficulty Bomb via hard fork from Mainnet at block 5,900,000. It is estimated this will occur around May 29th, 2018

This hard fork is part one of BitShares’ Core Release. The second is scheduled for December 6th, 2018.

A hard fork to introduce a new fee system and deconstruct the old API.

DigiByte Core v7.16.1 released via hard fork to improve GPU mining friendliness. Approximate date of June 21st, 2018.

A co-fork using BTC and ZCL to attain a new forked coin, Anonymous Bitcoin (BTCA). Snapshot occurs on September 9th, 2018.

 

Innovation or Betrayal?

There are various benefits of both hard and soft forks for the cryptocurrency world. In a sense, forks function not only as a way for developers to improve blockchain technology but also as a means for the community to ensure their voice is heard. In the case of Ethereum (ETH) versus Ethereum Classic (ETC), users banded together to express their disagreement with the development team. Instead of upgrading, they stuck to the principle that “code is law” and caused a permanent chain split. While there will always be those supporting the legacy chain that despise hard forks, it is important to remember that innovation and advancement of technology are what led us to cryptocurrencies and the blockchain in the first place.

 

What are your thoughts on hard forks? Let us know in the comments below.

 

Read more about Blockchain Technology.

Learn about Bitcoin’s new Lightning Network

 


Disclaimer: The above references an opinion and is for informational purposes only. It is not intended as personalised financial or investment advice. The opinions expressed by the author do not represent the opinion of BitPrime.
Last updated: 25/05/2018

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